Shipping industry is booming! A.P. Møller - Mærsk raised profit guidance for the third time since May, disrupting the market for much longer than expected

Due to the continuous disruption in the Red Sea supply chain and strong demand in the container market driving up freight rates, the world's second-largest container shipping company, A.P. Møller - Mærsk A/S, has once again raised its performance expectations. This is the third time the company has raised profit guidance since May, demonstrating the strong momentum in the shipping market.

On Thursday, A.P. Møller - Mærsk A/S announced that it now expects the full-year underlying operating profit to be between $3 billion and $5 billion, higher than the June forecast of $1 billion to $3 billion. In February this year, the group had predicted a potential loss of up to $5 billion.

The last time A.P. Møller - Mærsk A/S raised its performance expectations was in June, due to global supply chain delays and congestion leading to a significant increase in freight rates. Now, the company expects global container trade to grow by 4-6% this year, higher than the previous forecast of 2.5-4.5%.

At the end of last year, Houthi rebels began attacking in the Red Sea, forcing container shipping companies to detour around the southern tip of Africa, resulting in longer travel times and higher costs for trips between Asia and Europe.

Initially, A.P. Møller - Mærsk A/S believed that the disruption in the Red Sea would only last a few months, but now they believe it will continue for most of this year, and possibly even until 2025. The company initially thought that the large number of new ships ordered by competitors would lead to an imbalance in supply and demand, affecting profitability in the second half of the year.

Vincent Clerc, CEO of A.P. Møller - Mærsk A/S, previously expressed concerns that retailers worried about not receiving Christmas goods might exacerbate disruptions by placing early orders. The current third quarter is typically the busiest quarter for container shipping companies in terms of Christmas product shipments.

However, data shows that short-term rates for container transport have fallen from their peak in recent weeks, indicating that the pressure from early Christmas orders may be easing.

A.P. Møller - Mærsk A/S stated:

"Given the unpredictability of the situation in the Red Sea and the unclear supply and demand in the fourth quarter, trade conditions continue to experience fluctuations above normal levels."

Furthermore, the announcement disclosed second-quarter trading updates, with revenue down by about 2% to $12.8 billion and operating profit down by 40% to $963 million. However, there was little new information provided on how long the disruption in the Red Sea might last.

Some analysts believe that there may be further chaos later this year, with concerns from industry insiders that the possible return of Donald Trump to the U.S. presidency could distort global trade.

The full second-quarter interim results of A.P. Møller - Mærsk A/S will be released on August 7th